Everstone Capital eyes partial exit via S. Chand initial public offer

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Mumbai: Everstone Capital-backed education-focused publishing firm S. Chand Group has hired three investment banks and initiated work on an initial public offering (IPO) that could see the company raise as much as Rs.600 crore, according to two people aware of the issue.

“S. Chand has started working on its IPO and they are looking to raise around Rs.600 crore. They have hired JM Financial, Credit-Suisse and Axis Capital to work on the documentation and marketing of the offering,” said one the two people cited above requesting anonymity as he is not authorized to speak to the media.

The IPO will allow PE investor Everstone to sell part of its stake in S. Chand, he said. “At least one-third of the IPO, or around Rs.200 crore, will be a secondary share sale by Everstone, while the rest will be primary capital for the company’s various requirements,” he added.

In 2012, Everstone invested Rs.200 crore in the Delhi-based textbook publisher for a minority stake. The company raised a further Rs.179 crore in November 2015 from World Bank arm International Finance Corp. and Everstone.

S. Chand, a 75-year-old firm, publishes education books. According to the company’s website, it has a pool of more than 3,500 authors and published more than 15,000 titles.

Everstone Capital declined to comment on the development. Several emails sent to Himanshu Gupta, joint managing director at S. Chand Group, did not elicit any response. Emails sent to Credit-Suisse, JM Financial and Axis Capital also went unanswered.

S. Chand plans to file its share-sale prospectus with market regulator Securities and Exchange Board of India (Sebi) by August-September, said the second person cited above, also requesting anonymity.

“The company plans to use the IPO proceeds primarily for inorganic growth. They are looking at certain acquisitions and the money from the IPO will be used to finance them,” he said.

In 2014, S. Chand acquired a majority stake in Delhi-based publisher New Saraswati House. Earlier, it acquired Vikas Publishing House and Madhuban Books. In March this year, S. Chand invested in education-technology start-up Testbook.

The Mumbai-based start-up is building a personalized one-stop solution for all competitive exams, including Bank PO, UPSC and GATE.

In the last five years, private equity investors have invested almost a billion dollars in the education sector, according to data from Venture Intelligence, a private company financial database.

The S. Chand IPO will be the third attempt at an IPO exit for Everstone in recent times.

On 31 March, Hinduja Leyland Finance Ltd (HLF), the commercial vehicle financing unit of Ashok Leyland Ltd, filed its DRHP with Sebi. In July 2013, Everstone had invested Rs.200 crore for a 15% stake in HLF. The PE firm will be selling a part of its stake through the IPO.

In September 2015, VLCC Health Care Ltd, which runs beauty and wellness centres, filed for an IPO to raise Rs.600-700 crore. Everstone, which currently owns 15% in the company, plans to sell almost half its stake in the company through the IPO. Everstone invested Rs.60 crore in VLCC in 2007.

However, both these companies are yet to hit the market with their share sales.

So far this year, 11 firms have raised approximately Rs.7,783.6 crore through the IPO route, according to data from primary market tracker Prime Database. In 2015, 21 companies had raised Rs.13,614 crore through IPOs, data show.

For private equity funds looking for an exit, the IPO market remains an attractive option, said Munish Aggarwal, director at investment bank Equirus Capital Pvt. Ltd.

“For private equity funds, from an exit perspective, the options are to either sell to public market investors or to other private equity funds. Strategic exits are still few and far between,” he said.

The flow of IPO deals in the market is still strong, he said, as private equity investors look to utilize the buoyancy in the IPO market to create liquidity for their investments.

“People want to raise subsequent funds and for that they want to show exits and returns to their limited partners. This is a good time to liquidate their investments through public markets,” Aggarwal added.